From this April, tax on company cars will be based on carbon dioxide emissions per kilometre – so large vehicles with high fuel consumption will be hardest hit. A top-rate tax payer driving a £20,000 BMW 318 could end up £400 a year worse off.
Employees could get a nasty surprise
The new tax code was announced in late 1999, but not all employers informed their staff well in advance. Company car drivers who haven’t had advance notice won’t be happy when they see next year’s tax bill.
Company fleets will look different
Under the new rules, drivers can reduce their tax liability by choosing a company car with low carbon dioxide emissions. Expect to see more green machines and fewer gas guzzlers.
Driving further won’t save money
Under the old system you paid less tax if you did more mileage, so you could save hundreds of pounds by pushing your mileage above the 18,000 mile threshold. But not any more.
There’s more to come
Company car tax rates will be ratcheted up even further in 2003 and 2004. In the 2004/05 fiscal year, a top-rate tax payer will have to pay £1920 for the privilege of driving that BMW.